South Carolina has made an important move toward incorporating digital assets into its financial framework at the state level.
On March 27, lawmakers in the state put forward a new bill aimed at establishing a Bitcoin reserve to protect public funds from the effects of inflation.
At the same time, the state decided to drop its lawsuit against Coinbase, which alleged securities violations related to its staking services.
Bitcoin Reserve Bill
Representative Jordan Pace presented a bill that would allow South Carolina to invest a portion of public funds in Bitcoin.
The proposed law, known as the Strategic Digital Assets Reserve Act (H4256), positions Bitcoin as a protective measure against inflation and economic volatility.
If approved, the bill would empower the State Treasurer to allocate up to 10% of state-held funds to Bitcoin. However, there’s a cap—South Carolina would be unable to hold more than 1 million BTC.
The investments would be funded through existing resources like the General Fund and the Budget Stabilization Reserve Fund.
The bill also introduces transparency measures, requiring public disclosure of wallet addresses associated with the Bitcoin reserve. This would enable citizens to monitor transactions and verify holdings on the blockchain.
In an interesting addition, the bill allows residents to voluntarily contribute Bitcoin. The legislation includes strict storage requirements to safeguard these assets, stipulating the use of cold wallets or certified custodians.
Coinbase Staking Lawsuit Dismissed
In conjunction with this legislative initiative, South Carolina has opted to withdraw its legal action against Coinbase.
The lawsuit, initiated in June 2023, accused the crypto exchange of breaching securities laws through its staking services.
However, the dismissal came after an agreement was reached between the state’s securities division and Coinbase.
Coinbase’s Chief Legal Officer, Paul Grewal, expressed his support for the decision, highlighting that residents of South Carolina had missed out on nearly $2 million in staking rewards during the ongoing legal matter.
Grewal also expressed hope that other states, like California, New Jersey, and Illinois, would take similar actions.
This decision resonates with a recent action by Vermont, which also withdrew its lawsuit in early March.
The withdrawal followed a decision by the US Securities and Exchange Commission (SEC) to discontinue its case against Coinbase in February.
Mentioned in this Article
